UK families explore achieving longevity

Grant Gordon is Director General of the IFB (UK).

Friday, 14 June 2002 saw a gathering in London of over 100 family business delegates from home and abroad for the inaugural IFB National Forum Conference. The Institute for Family Business (UK), one of the youngest chapters of FBN launched at the end of 2001, marked its spot on the FBN map with its successful conference on the theme "Governance for Longevity in Family Companies".

To explore this theme, the opening presentation was made by world-renowned academic and Chairman of FBN Inter­national, Professor Alden G Lank. Addressing the theme "Determinants of Longevity in the Family Business", Professor Lank outlined 12 major factors that are key determinants in maintaining the success of these organisations through time.

One of the key planks Professor Lank identified was the requirement for appropriate governance institutions. Noting that any governance system is a combination of formal and informal elements, Lank argued that the absence of appropriate governance institutions can compromise the family enterprise. However, if well established, governance institutions can build bridges and create cohesion between the family and the enterprise.

The conference programme then moved on to presentations from family company owners who shared their experiences with the delegates. In the first of three presentations focused on the main building blocks for governance in the family business, Bill Gordon drew on his experiences as Chairman of the Family Council for William Grant & Sons in mapping out the development of their Family Council. He argued strongly in favour of the council as a means for relieving pressures and to help establish a more progressive ownership model. Gordon emphasised that the council was part of a whole system for family, owners and the business in which the family were able to "harness their passion, motivation and commitment".

The focus then moved to the role of the board within the governance system. Paul O'Hea, Chief Executive of the Colt Group, put forward the case for professionalising the board in family companies. His presentation took the audience through the transition he led within his own company to bring in better board performance. The result for Colt was "new momentum and direction" and a stronger sense of where the business had to go, leading to greater buy-in from the family shareholders.

The conference also heard from a well-known family business from Yorkshire, William Jackson & Son, on the advantages of written family constitutions. Family company Chairman and Joint Managing Director Christopher Oughtred shared his conviction that setting out "written rules of the game" helped to encapsulate his family's vision and values and created the ground rules for ownership, governance and management control, as well as added greater overall structure to their family enterprise.

Oughtred suggested that the written constitution was a tool the Chairman required in order to provide a road map to plan for and deal with family issues. He also described their "Development Advisory Group", which acts as independent arbitrator and councilor for family members in matters of career development and progression, and is accountable to the Board and the Family Council.

A panel of leading academics from leading European business schools, including London Business School, IMD and INSEAD, closed the morning session by adding their collective wisdom to that of the three family presenters. They observed that these families had created some elements of structure, fair process and planning in their pursuit of successful governance. The academics also drew attention to how effective communications in the family were another common success factor in these cases.

The afternoon session of the conference brought together another four family business owners in a panel chaired by Professor Michael Hay, Deputy Dean of the London Business School. The owners shared a broad diversity of views on how their families made governance work in the context of their business. The panel drew from of a diverse group of family companies.

Robert Willett, Chief Executive Officer of Willett International, outlined how he joined the family company having earned his spurs elsewhere, and the steps that had subsequently been taken to reshape the governance of the company to suit the business requirements and how non-family board participation had worked to their advantage.

Freddie Johnston, CBE, sketched the profile of another successful family enterprise. Johnston Press plc had gone down the path of raising capital from the public markets and passing management control into the hands of non-family management. In this case, the owning family ceded control of the company and its financial wealth subsequently rose beyond expectations. Johnston argued that there are advantages in opening the capital of the company both in terms of creating liquidity for shareholders and also for the succession process by allowing the best business leaders to come forward.

Philip Blackwell of Blackwell's, a multi-generational family company in the publishing industry, shared his case of recent transitions where the family moved from an active management role to being passive investors. He also highlighted the natural tensions that exist in the family business system where there are competing calls for investment and liquidity.

The last speaker of the day shared his experiences as part of an Australian entrepreneurial family that built on lessons learnt in the previous generation. Richard Owens, Chairman of the ROI Group and Managing Director of Oakvale Wines Pty Ltd used these lessons to create a family business governance system that has helped his third generation family company to flourish, notwithstanding changes that have ensued in the line of business. He offered some valuable lessons on how his family had structured their governance and paid attention to the dictum  "failing to plan is planning to fail".

Coming away from the inaugural IFB conference, delegates had high praise for the families that shared their real-life stories and for the open manner in which they spoke about their experiences. The audience had plenty of questions and comments for the speakers, and the conference broke up on a high note, with everyone having learned something new and made new family business acquaintances.

In the wake of their success of the National Forum Conference and to increase learning opportunities for families, IFB has launched a series of new events and programmes, including the launch of the IFB NextGeneration Forum, and a series of IFB Master Class seminars and IFB's first family business research project both in association with London Business School.